India Proposes 25% Duty on Chinese Solar Cells

More clouds are on the horizon for China’s solar industry, after a report by India’s Ministry of Commerce and Industry recommended that the country slap a 25% duty on imports of Chinese solar cells.

The report on Monday came in response to Indian solar-cell producers, who have become increasingly vocal in the last 12 months with their complaints over allegedly unfair competition from China, as the latter has looked to offset oversupply at home by increasing exports abroad.

The report noted that 38% of Chinese total solar-cell exports went to India in the first half of 2017, up from just over a quarter in the second half of 2016. One industry body cited in the report said this had led to “tough and unhealthy competition” in the market.

The report proposes that solar cells imported from China and Malaysia — another major exporter — be hit with a duty of 25% for one year before reducing it to 20% in the first half of the second year, then 15% for the rest of the year.

The new proposed tariffs are much milder than the 70% duty that the trade directorate proposed in January. The final duties will take effect only after India’s Finance Ministry gives the green light.

Such a move may deal a blow to the Chinese solar industry, which is still reeling from the government’s abrupt decision last month to end the subsidies that have powered its rapid growth over the years. The announcement is likely to lead to at least 20 gigawatts (GW) of planned solar installation being scrapped this year, according to consultancy Wood Mackenzie.

India’s solar market has the potential to be among the world’s most lucrative as it aims to build 100 GW of new solar capacity by 2022. The proposed duties could undermine this aim as the South Asian country relies heavily on Chinese production and know-how, the Chinese Embassy in India was quoted as saying in the report.

China has led the world in solar-power capacity for the past three years, reaching 130 GW by the end of 2017, official data showed. But much of that capacity has gone unused, with grids unable to accommodate enough solar-generated power.

Contact reporter Ke Dawei (daweike@caixin.com)